- Global markets (except gold) are tumbling. The demand for diamonds continues to grow as the world population now exceeds 7 billion people and consumer demand from rising global incomes looks to diamonds both for enjoyment and investment, writes James Fraser in "Penny Mining Stocks".
- The two largest consumers of diamonds are the US (no surprise) and China (perhaps more surprising to some). These countries lead jewellery demand for diamonds, with the US at 40% of demand and China in second-place at 16%. In fact, De Beers reports that the global diamond demand for jewellery was up 3% in 2014 to $81 billion, explains Fraser.
Four diamond mines are currently operating in Canada.
Diavik – The Diavik Mine is located in the Northwest Territories and is 60% owned by Rio Tinto and 40% by Dominion Diamond. Diavik commenced production in 2003 and produces 6-7 million carats annually. Discovered by Aber Diamond, which was led by mining Hall of Famers Gren Thomas (who now is Chairman at North Arrow Minerals), Diavik continues to have an indicated mine life through 2023 with potential for future expansion.
Ekati -The massive Ekati mine was discovered by Chuck Fipke and Stewart Blusson. Discovered at Lac de Gras, it kicked started the Canadian diamond business and resulted in the biggest land staking rush ever seen in Canadian mining history. With production dating back to 1998, the mine has already produced over 50 million carats. Ekati is Canada’s first surface and underground diamond mine. Dominion Diamond is the 89% percent owner of the mine. Projected closure is scheduled for 2020 but it is likely the Jay open pit will extend operations an additional 11 years.
Snap Lake – Snap Lake is expected to produce 1.4 million carats annually and have an approximate lifespan of 20 years from its opening in 2008. Snap Lake was De Beers’ first mine outside of South Africa.
Victor – Victor is also owned by De Beers and is Ontario’s first diamond mine. Annual production is ~600,000 carats. Victor is an open pit mine and approximately $1 billion was spent on the construction of the mine.
Diamond Investing With the Lundins
One of the most successful investing families in the resource markets the Lundin family is bullish on diamonds. Lundin’s first investment in diamonds has turned out extremely well with Lucara Diamonds (LUC:TSX) being one of the best performing resource stocks during the past couple of years.
The Lundin family through Zebra Holdings & Investments has also taken a nearly 20% stake in North Arrow Minerals (NAR:TSXV), a junior diamond company with a portfolio of diamond exploration projects in Canada.
Currently two companies are building diamond mines in Canada.
Stornoway Diamonds (SWY:TSX) is well under way on constructing the Renard Mine in Quebec, which once constructed will be Canada’s newest mine with initial production expected in 2016. This will be the first diamond mine ever in Quebec and is expected to produce 1.6 million carats a year over an 11 year mine life.
Mountain Province Diamonds (MPV:TSX) will be one of the world’s largest and richest diamond mine with production scheduled to commence in Q3, 2016. The project is a joint venture with diamond giant De Beers owning 51% and MPV 49%.
The two new mines once in operation are expected to boost Canada’s market share in world production to 15.1%.
